3 Reasons to Buy Bank of America

The following video is part of our "Motley Fool Conversations" series, in which senior analyst Anand Chokkavelu, CFA, discusses topics across the investing world.

Bank of America is probably the riskiest stock of the 30 Dow components. But as a bull on Bank of America for those who can understand and tolerate the risks, Anand explains three reasons he's optimistic:

Core earnings power and cost savings from Project New BAC can allow Bank of America to gradually increase capital levels to comply with Basel III standards without excessive dilution.

Historically low price-to-tangible book value of 0.6 versus a 20-year average of 2.5 means a lot of pessimism is built into this too-big-to-fail bank. And on a relative basis, Bank of America's currently valued lower than peers Citigroup, JPMorgan, and Wells Fargo.

Eventual dividend raises can be a major signal of strength and a catalyst for its share price.

Watch the video below for all of Anand's thoughts.

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